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Sarbanes-Oxley: Worse than No Solution at All?

Sarbanes-Oxley: Worse than No Solution at All?

by Rick Turoczy on October 3, 2005

While many executives agree that some law was necessary, many have also become disillusioned with the drain on time and resources that it requires. These requirements can fall disproportionately hard on smaller public companies, many of which have less formal financial-reporting processes than larger older companies, and fewer staffers to create or execute any newly required processes.

USA Today reported in October 2003 that one such publicly traded company—hardware wholesaler Moore-Handley, which had 2002 sales of $151 million—was going so far to avoid falling under SarbOx rules that it was delisting itself from the Nasdaq exchange.

Company executives estimated compliance would cost the company $250,000, but Moore-Handley had only made a net profit of $300,000 in the last fiscal year. So it made economic sense for Moore-Handley to react the way it did.

This kind of cost consequence may spread to other companies as well.

Sarbanes-Oxley: Worse than No Solution at All?

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